With Deficit Closing in on $400 Billion, Liberals Detail More Spending to Come

November 30, 2020 Updated: November 30, 2020

OTTAWA—The federal Liberals are proposing $25 billion in new spending to help Canadian businesses and workers make it through a COVID−19 winter and vowing tens of billions more to help the country recover from the pandemic.

The government’s fall economic update proposes to send extra child−benefit payments to families next year as well as cash for skills training and to create new jobs.

For businesses, the government wants to bring the wage subsidy back to 75 percent of business payroll costs and extend the business rent subsidy to mid−March.

Finance Minister Chrystia Freeland’s update makes clear the measures will be removed once the economy improves, although the timing is tied to the path of the pandemic.

The cost to date has the federal deficit reaching $381.6 billion this year, but the government’s math says it could close in on $400 billion if widespread lockdowns return in the coming weeks.

Freeland’s update tees up work already underway to craft a spring budget focused on an economic recovery. She says federal support for that will include a three−year stimulus plan worth up to $100 billion.

Highlights

Key elements from the federal government’s fiscal update include:

The pandemic response from Ottawa. The total cost of the federal response to COVID−19 amounts to $490.7 billion, or nearly 83 percent of federal and provincial aid. That means $8 out of every $10 in support comes from Ottawa, down from $9 out of every $10 from the July fiscal snapshot.

The “Netflix tax.” For the first time, Netflix and other foreign streaming giants such as Amazon and Apple TV+ will be subject to sales tax in Canada, according to the fiscal update. The government says GST/HST will apply to all companies that provide digital services—which means Netflix would charge sales tax on subscriptions north of the border. While the European Union moved to tax digital platforms two years ago, Canada says it is prepared to act “unilaterally, if necessary.”

Work−from−home tax break. Employees working from home with “modest expenses” in 2020 can claim up to $400, based on time spent at the dining−room desk. Canadians can make the claim “without the need to track detailed expenses,” and the tax man “will generally not request” confirmation from employers, according to the fall economic statement.

Increasing fiscal−stabilization payments. Responding to a call from provinces whose finances have taken beatings, the Liberals say they’ll increase the maximum payment under a program designed to help provincial governments deal with temporary economic shocks. The cap will go from $60 per resident, set in 1987, to $170 per person and increase with economic growth.

Support the troops. The government is also proposing to sign off on an additional $600,000 to top up the Veterans Emergency Fund that would ensure more financial support for veterans whose well−being is at risk “due to an urgent and unexpected situation.”